MasterCard Elbows Its Way Past Rivals

Staying out of trouble is always a plus.

Always a bridesmaid, never a bride. That's generally been the story for MasterCard(NYSE: MA) in its long-standing rivalry with Visa(NYSE: V), but MasterCard's just-released second-quarter results tell a happier tale for the merchant-services company from Purchase, N.Y.

The envelope, pleaseFirst, the highlights from MasterCard's quarterly earnings report:

Net revenue increased 9% year over year, to $1.8 billion.

Net profit was $700 million, or $5.55 per diluted share, up 15.1% YOY.

Worldwide purchase volume was up by 13% YOY, to $661 billion.

The net profit of $700 million includes a $13 million pre-tax charge for settlement of a pending lawsuit against it and other merchants. Net profit without the charge was $713 million, or $5.65 per share. Other highlights include an increase in cross-border volumes of 17%, and an increase in gross dollar volume of 15%.

The benefit of staying (mainly) out of trouble with the law"Though economic uncertainties continued to persist," MasterCard CEO Ajay Banga said in a statement, "we experienced solid volume and processed transaction growth in all regions as we are focused on driving our global business to expand the reach of electronic payments." The company has issued 1.8 billion MasterCard and Maestro-branded cards, and it has increased processed transactions to 8.5 billion, up 29%.

And up against its perennial rivals, including Visa, MasterCard is posting impressive numbers:

The company's net revenue increase of 9% YOY easily beat both American Express' (NYSE: AXP) 3% and Discover Financial Services' (NYSE: DFS), and it came within striking distance of Visa's 11% growth.

MasterCard's net income growth of 15.1% YOY again easily beat both American Express' 6% and Discover's negative 10.6%. Visa reported a $1.8 million net loss in its most recent quarter, because of a litigation provision of $4.1 billion.

You catch the bouquet; I'm off on my honeymoonThe death of cash has no doubt been greatly exaggerated, but perhaps not by as much as one might think. And as more and more transactions go electronic, whether it's with traditional credit card swipes, smartphone bumps, or whatever the next payment innovation will be, electronic merchant-services companies are going to profit. And the ones running a better operation, which includes steering clear of multibillion-dollar litigation settlements, might end up spending even less time lining up with the ne'er-do-wells of the business world to catch the bouquet: companies like MasterCard.

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